July 3034 bond attracts higher yield over short tenor

Trends in the debt instrument market have shown that long term instruments are generating higher yields than short term bonds, reflecting market sentiments as trading opens for the year.

Market sentiment that ushered in trading for the year reflected that investors were largely bearish in the bond market as yields trended upwards across the curve.

This increase in yields was more pronounced on long dated maturities especially on the July 2034, up 39 bps to 15 .64%. While the yield on the seven-year benchmark bond inched up 4bps, the yield on both the 7yr and 10-year benchmark bonds increased by 111bps to 15.83 percent and 16.19 percent respectively.

Analysis of the debt market performance as the trading year opens on good note showed that for the first day of trading on 3rgd January, the Central Bank of Nigeria (CBN) conducted an Open Market Operation (OMO) auction selling N50.8billion worth, of 184 days and 352 days tenured bills at 18.00 per cent and 18.60 per cent stop rates respectively.

However, irrespective of the potential adverse impact the auction may have for system liquidity, money market rates declined across all the tenured bonds.

While the three months and six months NIBOR rates declined by 40bps and 45bps to 18.15 per cent and 21.76 per cent respectively, the one month NIBOR rate declined by 103 bps to 16.69 per cent. Going forward, Analysts summed that market activity would largely be driven by liquidity levels.